Prospectus - Satellite Wagering Facility San Mateo Fair - Christopher Korby - CARF wAddendum-Mar -08

8/2/2019 Prospectus - Satellite Wagering Facility San Mateo Fair - Christopher Korby - CARF wAddendum-Mar -08

1/17

FOR THE

SAN MATEO COUNTY

EVENT CENTER

TO

OPERATE A SATELLITE

WAGERING FACILITY ON ITS

FAIRGROUNDS

PREPARED BY:CHRISTOPHER KORBY

EXECUTIVE DIRECTOR,

CALIFORNIA AUTHORITY

OF RACING FAIRS

PROSPECTUS

OCTOBER 2007


2/17

* Cypress Hall (14) and Oak Hall (15)are proposed satellite wageringfacility locations.

SAN MATEO COUNTY EVENT CENTER DEVELOPS AND OPERATES A SATELLITE WAGERING FACILITY AT ITS FAIRGROUN

I.

II.

III.

IV.

V.

TABLE OF CONTENTS

PLAN

TIMELINES AND CALENDAR

FINANCIAL PROJECTIONS

SATELLITE WAGERING ORIENTATION - BACKGROUND

i. ORGANIZATIONS RELATED TO SATELLITE WAGERING

ii . DUTIES & RESPONSIBILITIES OF SIMULCAST ORGANIZATIONS

iii. DUTIES & RESPONSIBILITIES OF SATELLITE FACILITY

iv. PARIMUTUEL DISTRIBUTIONS

STATEMENT OF QUALIFICATIONS

PROSPECTUS


3/17


PROSPECTUS

PLAN

This prospectus describes a plan for the San Mateo

County Event Center Fair (SMCEC) to develop andoperate a Satellite Wagering Facility (SWF) on the SanMateo Fairgrounds.

This plan envisions that the San Mateo County EventCenter, in collaboration with California Authority ofRacing Fairs (CARF), California Department of Food andAgriculture Division of Fairs and Expositions (CDFAF&E) and the California Construction Authority (CCA)will renovate, upgrade and convert Oak Hall andCypress Hall into a Satellite Wagering Facility equal to or

better than the facility currently operated in San Mateo.

California Business and Professions Code Section19605.45 provides specific authorization for the SanMateo County Event Center to operate a SWF when BayMeadows ceases to operate as a race track. Theprospectus outlines a development plan that envisions aFair-operated satellite facility opening September 2008.

An experienced development team made up of CARF,CDFA and CCA, working with the San Mateo CountyEvent Center, can offer the specialized designers,contractors and vendors necessary to implement satellitewagering. This development team will also assist inassembling a financing package with a targetdevelopment budget of $3.2 million. This samedevelopment team will provide start-up training andsupport for Fair personnel involved in satellite wagering.

CARF and CDFA will assist in securing the necessaryapprovals and licenses to operate. CARF will work withthe San Mateo County Event Center to negotiate therequired contract with Northern California Off-TrackWagering Inc. (NCOTWInc) for conducting parimutuelwagering. NCOTWInc will furnish all parimutuelpersonnel and provide support operations necessary for

conduct of satellite wagering. NOTWInc bears the costof operating the parimutuel component of satellitewagering operations.

California Authority of Racing Fairs (CARF) and CDFADivision of Fairs and Expositions can currently offerfinancing of $1.65 million. CARF offers $650,000 as grant,with $50,000 of that available immediately for designservices and $600,000 available for general development

and construction costs. CDFA F&E is offering $1,000,

a low-cost loan to be paid back from operating revenugenerating from satellite wagering operations. Thisfinancing requires certain commitments from the San County Fair.

This prospectus projects $60.2 million in annual parimhandle and an attendance of 179,000 at a satellite facilioperated by the San Mateo County Event Center. Thiprojected handle will generate $2.5 million in grossrevenues with a $1.2 million cost of operation, yieldinmillion in net revenue. Furthermore, the facility willgenerate approximately $198,000 in .33% revenues to t

city and/or county of San Mateo.

This schedule envisioned in this plan requires that theMateo County Event Center Board of Directors take acto proceed no later than November 30, 2007.

...projected handle willgenerate $2.5 million in grossrevenues with a $1.2 million

cost of operation, yielding $1.3

million in net revenue.

Furthermore, the facility willgenerate approximately

$198,000 in .33% revenues tothe city and/or county of San

Mateo.

san matecounty

Fair


4/17


PROSPECTUS

san matecounty

Fair

TIMELINES

OCTOBER 2007San Mateo County Event Center (SMCEC) Board of

Directors adopts plan to develop, license and operate asatellite wagering facility with assistance and financingfrom CARF, CDFA and CCA. Fair team commits fundingto project. Request for approval to operate satellitewagering sent to CDFA. Architect engaged and beginsdesign. CARF and CCA begin to put together supportingcontractors and specialized vendors. CARF and SMCECsubmit letter-of-intent to California Horse Racing Board(CHRB). CEQA review commences.NOVEMBER 2007Permit discussions, if necessary, with County and Citycommence. Balance of Financing Package complete.

DECEMBER 2007Initial design review completed. Design proceeds to nextstage. CEQA review continues.

JANUARY 2008Final design approved. Construction contractor(s) engaged.Last interim rentals of Oak Hall and Cypress Hall. CEQAcompleted. City and county permits in place. Letter fromSecretary of Food and Agriculture approving satellitewagering at SMCEC received. Design forwarded to CHRBwith letter from CDFA and progress report sent to CHRB.

FEBRUARY 2008Renovation and conversion of Oak Hall and Cypress Hall

begins. Furnishings selected and ordered. Electronicequipment ordered.

MARCH/APRIL/MAY/JUNE 2008Renovation and conversion of Oak Hall and Cypress Hallcontinues. Request for license hearing sent to CHRB.

JULY 2008Renovation and conversion of Oak Hall and Cypress Hallcontinues. Installation of satellite, television and other

technical systems begins. Progress report and request forlicensure sent to CHRB.

AUGUST 2008Construction and renovation completed. Final installationand testing of technical systems completed. Satellitepersonnel hired. CHRB inspection completed. CHRBissues license for operation.

SEPTEMBER 2008Opening day set. Facility opens.

OCTOBER 2007

NOVEMBER 2007

DECEMBER 2007

JANUARY 2008

FEBRUARY 2008

MARCH/APRILMAY/JUNE 2008

JULY 2008

AUGUST 2008

SEPTEMBER 2008

SMCEC Board adopts plan. FinancingCARF, CDFA and CCA. Request for appsent to CDFA. Design Begins. CARF and SMsubmit letter-of-intent to CHRB.

County and City permit discussions commence.Balance of Financing Package complete.

Initial design review completed. Design proceeto next stage. CEQA review continues.

Final design approved. City and county pein place. Letter from Secretary of Food &received. Design forwarded to CHRB with from CDFA. Progress report sent to CHRB.

Renovation and conversion of Oak Hall and Cyprus Halbegins. Furnishings and electronic equipment ordered.

Renovation and conversion of Oak Halland Cyprus Hall continues. Request forlicense hearing sent to CHRB.

Renovation and conversion of Oak Hall and Cyprucontinues. Installation of satellite, television andtechnical systems begins. Progress report sent to CH

Construction and renovation completed. Fiinstallation and testing of satellite, televisand other technical systems completSatellite personnel hired. CHRB inspectcompleted. CHRB issues license for operati

OPENING DAY SET. FACILITY OPENS.


5/17

October 07

S M T W TH F S

1 2 3 4 5 6

7 8 9 10 11 12 13

14 15 16 17 18 19 20

21 22 23 24 25 26 27

28 29 30 31

November 07

S M T W TH F S

1 2 3

4 5 6 7 8 9 10

11 12 13 14 15 16 17

18 19 20 21 22 23 24

25 26 27 28 29 30

December 07

S M T W TH F S

1

2 3 4 5 6 7 8

9 10 11 12 13 14 15

16 17 18 19 20 21 22

23 24 25 26 27 28 29

30 31

January 08

S M T W TH F S

1 2 3 4 5

6 7 8 9 10 11 12

13 14 15 16 17 18 19

20 21 22 23 24 25 26

27 28 29 30 31

February 08

S M T W TH F S

1 2

3 4 5 6 7 8 9

10 11 12 13 14 15 16

17 18 19 20 21 22 23

24 25 26 27 28 29

March 08

S M T W TH F S

1

2 3 4 5 6 7 8

9 10 11 12 13 14 15

16 17 18 19 20 21 22

23 24 25 26 27 28 29

30 31

April 08

S M T W TH F S

1 2 3 4 5

6 7 8 9 10 11 12

13 14 15 16 17 18 19

20 21 22 23 24 25 26

27 28 29 30

May 08

S M T W TH F S

1 2 3

4 5 6 7 8 9 10

11 12 13 14 15 16 17

18 19 20 21 22 23 24

25 26 27 28 29 30 31

June 08

S M T W TH F S

1 2 3 4 5 6 7

8 9 10 11 12 13 14

15 16 17 18 19 20 21

22 23 24 25 26 27 28

29 30

July 08

S M T W TH F S

1 2 3 4 5

6 7 8 9 10 11 12

13 14 15 16 17 18 19

20 21 22 23 24 25 26

27 28 29 30 31

August 08

S M T W TH F S

1 2

3 4 5 6 7 8 9

10 11 12 13 14 15 16

17 18 19 20 21 22 23

24 25 26 27 28 29 30

31

September 08

S M T W TH F S

1 2 3 4 5 6

7 8 9 10 11 12 13

14 15 16 17 18 19 20

21 22 23 24 25 26 27

28 29 30

C A L E N D A R

PROJECT PHASE DATE

SMCEC Board Adopts Plan/Begin Financing with

Assistance from CARF, CDFA & CCA/Request

CDFA Approval to Operate SWF/Engage

Architect & Begin Design/CARF & CCA Review

Contractors & Vendors/CARF & SMCEC Submit

Letter of Intent to CHRB/Begin CEQA Review

OCTOBER

Continue Above/Permit Discussion if

Necessary/Complete Financing PackageNOVEMBER

Initial Design Review Complete/Design Proceeds

to Next Stage/CEQA Review ContinuesDECEMBER

Final Design Approved/Contractors Engaged/Last

Interim Rentals of Oak & Cyprus Halls/CEQA

Review Completed/City & County Permits in

Place/Letter from Secretary of Food & Ag

Received/Design Forwarded to CHRB with Letter

from CDFA/Progress Report Sent to CHRB

JANUARY

Renovation & Conversion of Oak & Cyrus Halls

Begins/Furnishings Selected &

Ordered/Electronic Equipment Ordered

FEBRUARY

Renovation and Conversion of Oak & Cyprus

Halls Continues/Request for License Hearing

Sent to CHRB

APRIL, MAY,

JUNE

Renovation and Conversion of Oak & Cyprus

Halls Continues/Installation of Satellite,

Television & Technical Systems Begins/Progress

Report & Request for License Sent to CHRB

JULY

Construction & Renovation Completed/Final

Installation & Testing of Technical Systems

Completed/Satellite Personnel Hired/CHRB

Inspection Completed/CHRB Issues License for

Operation

AUGUST

Opening Day Set & Facility Opens SEPTEMBER

2007-2008


6/17

OPERATIONS REVENUE

Admissions and Parking - Satellite 570,000$

Total Admissions & Parking 570,000$

Parimutuel Revenue

Satellite Location Fee 2% 1,204,000$

ADW 270,000$

Promotion Revenues - Satellite 48,000$Total Parimutuel Revenues 1,522,000$

Satellite F&B Concessions

Food & Beverage - Satellite 70,000$

Bar Operations 37,500$

Total F&B Concessions 107,500$

san matecounty

Fair

FINANCIAL PROJECTIONS

The financial projections presented here assume that satellitewagering handle and attendance in San Mateo will continue at alevel of 70% of Bay Meadows using 2006 as a baseline referenceyear. This projection is based on the departure of the trainers,

grooms and other attendants who will move to a differentstabling and training location when Bay Meadows closes. Usingthe assumption of 70%, we are projecting that a SWF at willtransact $60.2 million in annual parimutuel handle with anannual attendance of 179,000. This will in turn generate $1.52million in parimutuel commissions to the Fair plusapproximately $1 million in operations' revenue (admissions,parking, food and beverage, program sales, etc.), producing atotal of $2.52 million in gross revenues. We project that the costof operating the facility will be $1.2 million, leaving projected netrevenue of $1.3 million annually for the San Mateo County EventCenter. Furthermore, based on these assumptions, a Fair-operated SWF will generate $198,000 in revenue for the cityand/or the county of San Mateo.

Satellite Racing Concessions

Program Sales - Satellite 63,000$

Racing Forms, TipSheets, Digest 240,000$

Total Racing Concessions 303,000$

Misc. Satellite Concessions

ATM Revenue 20,000$

Gift Shop Sales 2,000$

Miscellaneous Simulcast -$Total Misc. Concessions 22,000$

TOTAL SATELLITE REVENUE 2,524,500

SATELLITE EXPENSES

Salaries & Wages

Salaries & Wages - Perm. 440,000$

O/T Salaries & Wages- Perm. 5,740$

Salaries & Wages - Temp 4,000$

O/T Salaries & Wages - Temp. 500$

Total Salaries & Wages 450,240$

Expenses

Payroll Taxes 35,000$

Health Insurance 92,000$

Unemployment Insurance 4,000$

Life Insurance 2,000$Disability Insurance 3,600$

Insurance W/C 28,000$

Union Pension Contributions 17,000$

Legal Services $ 5,000

Security 92,000$

Alarm Monitoring Service 7,000$

Outside Services 12,000$

Meals & Entertainment 1,500$

Travel 2,500$

Hiring Expense 7,500$

Training 10,000$

Depreciation of Office Equipment 10,000$Supplies 7,500$

Permits/Licenses/Certifications 2,000$

Janitorial Supplies 18,500$

Dues & Subscriptions 19,145$

Advertising 35,000$

Promotion 25,000$

Programs 43,000$

Daily Racing Forms/Digest 202,500$

Tip Sheets 4,500$

Gift Shop 1,500$

Utilities - Electricity 6,000$

Utilities - Gas 20,000$

Cable Television 15,000$

Telephone/Pager 3,500$

Repair & Maintenance 5,000$

TOTAL SATELLITE EXPENSE 1,187,485$

NET OPERATING INCOME (LOSS) 1,337,015$$

SAN MATEO COUNTY EVENT CENTERPROJECTED SATELLITE WAGERING ANNUAL BUDGET


PROSPECTUS


7/17

Steward's Stand at the CaliforniaState Fair, 1891.

SATELLITE WAGERING ORIENTATION

BACKGROUND

The history of horseracing in California reflects a long-

standing association with Fairs. Early, organized racingbegan in Stockton and Sacramento in the late 1840'sduring the days of the Gold Rush. The racetrack inPleasanton has operated continuously since 1856, at firstin private hands, later as a Fair. The breeding andtraining of fine racehorses are aspects of the agriculturaleconomy. Just as cattle are bred for meat and milkproduction, or sheep for wool production, racehorses are

bred and trained for speed and stamina. It's natural thatracing competition, along with other livestockcompetition, would be conducted at the local or regionalagricultural expositions.

Horseracing Law, in its opening chapter, Business andProfessions Code, Article 1, Section 19401, states thelegislative intent that parimutuel wagering on horseracing should support Fairs.

19401. The intent of this chapter is to allowparimutuel wagering on horse races, while:

(a) Assuring protection of the public.(b) Encouraging agriculture and the

breeding of horses in this state. (c) Supporting the network of California

fairs.(d) Providing for maximum expansion

of horse racing opportunities in thepublic interest.

(e) Providing uniformity of regulation foreach type of horse racing.

The marriage of Fairs and horseracing has deep roots inCalifornia political history. Modern parimutuelwagering began in 1933 with the direct intention ofgenerating revenue for the State, for Fairs (through Fairs

& Expositions fund) and for the continued support ofhorseracing. In 1987, legislation carried by Senator KenMaddy, SB14, expanded parimutuel wagering inCalifornia by creating a statewide satellite wageringnetwork. Under the provisions of SB14 and subsequentlegislation, Fairs and existing racetracks are the venuesfor off-track wagering. More recently, federal courts

have ruled that certain Native American tribes may op

Satellite Wagering Facilities. Twenty-three Fairs and firacetracks are currently licensed to conduct satellitewagering.

As a consequence of this expansion, the revenue to Faifrom horseracing has increased significantly. Fairs hav

benefited in two ways from these developments: 1) Fathat conduct satellite wagering benefit directly from thconducting parimutuel wagering themselves at their F2) all Fairs benefit from revenues generated to the F&EAccounts.

san matecounty

FairSAN MATEO COUNTY EVENT CENTER DEVELOPS AND OPERATES A SATELLITE WAGERING FACILITY AT ITS FAIRGROU

PROSPECTUS


8/17

san matecounty

Fair

ORGANIZATIONS RELATED TO HORSE RACING

AND SATELLITE WAGERING

CALIFORNIA AUTHORITY OF RACING FAIRS (CARF)CARF represents its member Fairs in matters that relate tohorse racing and satellite wagering. CARF's seven-memberBoard of Directors is elected by its membership fromamongst member Fairs. On behalf of those Fairs thatconduct live racing, CARF negotiates joint contracts,manages contractors and vendors, prepares and submitslicense applications, and manages Host Track simulcastoperations. On behalf of its member Fairs conducting

satellite wagering, CARF prepares license applications andprovides administrative, procedural, and technical support.Contracts between Fairs and simulcast organizationsrelating to satellite wagering are negotiated by and throughCARF. CARF formulates and represents advocacypositions on legislative matters in concert with WesternFairs Association and the Division of Fairs and Expositions.

CALIFORNIA HORSE RACING BOARD (CHRB)The CHRB has statutory oversight of all horseracing inCalifornia. Its nine commissioners are appointed by theGovernor. The Board hires an Executive Director whoadministers Staff regulatory functions, including licensing,audits, and investigations. All racing associations, satellitewagering facilities, and personnel must be licensed by theCHRB.

RACING ASSOCIATIONS

Racing associations, with the exception of the Racing Fairs,are private organizations, operated for profit, licensed bythe state to conduct horseracing. They may be constitutedas partnerships, corporations, or real-estate investmenttrusts. Private racing associations in California, with theexception of Del Mar and Oak Tree, own the venues atwhich they operate. Racing Fairs, which are publicly-owned racing associations, conduct horseracing to generaterevenues which support general Fair activities. Everyracing association is allowed, and those above a certain sizeare required, to simulcast their races.

HORSEMEN'S ORGANIZATIONSThe horsemen are the owners and trainers of the horses tcompete at racing meetings conducted by the racing

associations. Horsemen share equally with racingassociations in the division of simulcast revenue andexpenses. Revenue to horsemen is distributed in the formpurses to winning horses. Each horseracing breed(Thoroughbred, Quarter Horse, Standardbred, Appaloosetc.) has a recognized association authorized to negotiateand contract on behalf of its members. Thoroughbredowners are represented by the Thoroughbred Owners ofCalifornia (TOC); Thoroughbred trainers are representeCalifornia Thoroughbred Trainers (CTT); Standardbred(harness) horsemen by the California Harness Associatio(CHA); quarterhorses by Pacific Coast Quarter HorsemeAssociation (PCQHA); Arabians by ARAC; Appaloosas b

Cal Western Appaloosa Racing Association; mules byAmerican Mule Racing Association (AMRA).

SIMULCAST ORGANIZATIONS:NCOTWInc and SCOTWIncThe original enabling legislation for simulcasting, SB14,provided that the racing associations, the Fairs and thehorsemen form an organization to oversee and administesimulcast activities. Two such organizations have beenformed: Northern California Off-Track Wagering Inc.(NCOTWInc.) and Southern California Off-Track WageriInc. (SCOTWInc.). See further description below. They

responsible for totalisator (wagering computer) services,satellite transmission, parimutuel clerks, banking, andaccounting. Statute requires that satellite wagering Fairshave a contract, approved by the CHRB, with theappropriate regional simulcast operator.

NCOTWincNorthern California Off-Track Wagering Inc., oversees thadministration of simulcast operations in NorthernCalifornia. Its members are Bay Meadows, CaliforniaAuthority of Racing Fairs (CARF), horsemen (TOC), andGolden Gate Fields. NCOTWInc sets policy, managescontracts for conduct of parimutuel wagering and emplo

parimutuel personnel at off-track simulcast facilities.SCOTWIncSCOTWInc. is the simulcast organization set up underprovisions of SB14 in Southern California. Its members aracing associations, a racing Fair, satellite Fairs, and eachhorsemen's association. SCOTWInc. is a limited partnerwith a corporation as the general partner. SCOTWInc.administers simulcast operations through its own staff ancontracted services. Contracts covering satellite wagerinFairs are made directly with SCOTWInc.


PROSPECTUS


9/17

san matecounty

Fair

DUTIES AND RESPONSIBILITIES OF

SIMULCAST ORGANIZATIONSSatellite wagering operations fall into two categories:

1) operations provided and paid for by the simulcastorganization

2) operations provided and paid for by the SatelliteFacility.

Duties and responsibilites of the simulcast organization aredescribed below.

DUTIES AND RESPONSIBILITIES OF THESIMULCAST ORGANIZATIONSThe simulcast organization provides and pays foraudiovisual signal transmission and all parimutuel costs,including parimutuel employees on-site at satellite facilites.To cover these costs, it receives a small percentage of the

off-track handle.

PARIMUTUEL PERSONNEL AND OPERATIONSParimutuel personnel handle operations directly related toprocessing wagers. These operations include having a clerkat each terminal, money room and supervisory staff, andadministrative support at the Host Track. The Host TrackMutuels Manager assigns the clerks and supervisor at eachsite. The local supervisor is also the Money Room attendantand has responsibility for the cash bank on-site. Allparimutuel clerks in California are union members and

belong to the Parimutuel Clerks Guild Local 280 SEIU. Thesimulcast organization is also responsible for banking,

armored service, currency counting machines, payroll, andaudit.

TOTALISATORThe Totalisator is a computerized data processing operationthat tabulates wagering pools, issues bet tickets, andcalculates pay-offs. The system extends from cash register-like terminals at each wagering location, through a high-speed data communications system to a central dataprocessing hub. All wagers are processed identically; awager at any satellite location is tabulated into the samepools as wagers at the Host Track. Totalisator servicesinclude technical operations and maintenance personnel.

DATA PROCESSING HUBThe wagering data processed by the totalisator computers istransmitted back and forth between the hub and satellitesites via specially dedicated telephone data lines. Thesespecial high-speed circuits run directly from each site to thecentral computer. The system must operate fast enough sothat entry of a wager at the satellite site, relay of that wagerto the central computer, tabulation, and issuance of the betticket hundreds of miles away takes less than one second.

SATELLITE UPLINK; ENCRYPTION;SATELLITE TRANSPONDERFour primary elements constitute the audiovisual

transmission system. These are 1) satellite uplink, 2)encryption (scrambling), 3) satellite transponder time, ansatellite downlink and closed circuit television system. Tsatellite downlink and closed circuit television system arethe responsibility of the Fair and will be discussed belowThe other three elements are the responsibility of thesimulcast organization. Here is a brief description of thesservices.

The satellite uplink is an earth transmitting station thatbeams a television signal from the Racetrack to atelecommunications satellite in orbit over the equator. Th

uplink sends a signal supplied by a television productionfacility at the track.

Encryption is the technical term for electronicallyscrambling a communications signal. The audiovisualtelevision signal is scrambled to prevent recognizablereception by unauthorized users. A special code thatauthorizes decoders to reconstitute the signal intorecognizable form is carried directly on the scrambled sigUnlike most residential scrambling systems, this system cturn decoders on and off immediately.

The telecommunications satellite parked over the equato

functions as a distant relay station. Signals beamed to it aamplified and retransmitted back to a wide coverage areaearth. Users rent or lease time on these satellites as needeAs satellite distribution of live racing has expanded, thehorseracing industry has become a major purchaser ofsatellite time.


PROSPECTUS


10/17

san matecounty

Fair

DUTIES AND RESPONSIBILITIES OF THE

SATELLITE FACILITY

DUTIES AND RESPONSIBILITIES OF THESATELLITE FACILITY

Satellite wagering will probably become the Fair's mostprofitable interim event. The Fair must take care thatplanning for its implementation includes an assessment ofits impact on all other Fair activities. The receiving site (Fairor Racetrack) provides and pays for audiovisual receivingequipment, physical facilities, and all non-parimutuelpersonnel. The Fair Satellite Facility pays the cost of theseoperating expenses from its commission on parimutuelhandle and from revenue generated by admissions,parking, concessions, and other miscellaneous sources.Careful planning with CARF and F&E must precedeimplementation. A more detailed description of theseresponsibilities follows.

PHYSICAL FACILITIES; PERSONNELThe Fair provides and maintains the physical facilities forsatellite wagering operations. This includes buildings,utilities, parking, safe ingress and egress, outdoor lighting,signage, and fencing. The Fair may charge for parking andfor admission; typical prices are $1 or $2 for parking, and $2or $3 for admission, perhaps with a higher admission forupgrade to an area of finer amenities. Importantconsiderations in building preparation include ease ofaccess, good HVAC and proper lighting. Outdoor lightingin the parking lot and over walkways to the Satellite Facility

is important. Planning for parking and admissions moneycollection must include year-round weather conditions,crowd control, and security. Provisions must be made fortwo money counting rooms: one, controlled by the Fair, forcash receipts from parking, admissions, program sales, andmiscellaneous sales; the other, controlled by the parimutueldepartment, for cash necessary to conduct wageringoperations. The level of security for the Fair operationsMoney Room is the Fair's decision. The parimutuel MoneyRoom must be secured by an alarm system that connectsdirectly to a local law enforcement agency or to an alarmcompany with a 24-hour dispatcher. Security guards must

be on duty at all times that wagering is conducted.

SATELLITE RECEIVING ANDAUDIOVISUAL SYSTEMSStatute stipulates that the Fair is responsible for provision ofthe satellite downlink and closed circuit TV system. CARFprovides these systems at no initial cost to the Fair. TheFair, however, is expected to contribute to an equipmentreplacement fund based on equipment value and projectedlifetime.

EMERGENCY MEDICAL SERVICESFirst Aid and medical emergency services must be arrang

with private services or local public emergency responseteams.

FOOD AND BEVERAGE SERVICEFood and drink concessions represent an important elemof service provided to satellite patrons. Careful selectionan appropriate vendor should guide this decision. Fairsshould consult with CARF to assure that the concessionaimeets standards expected by the CHRB.

EMPLOYEESAll personnel in the satellite wagering operation outside tParimutuel Department are Fair employees. As notedabove, the CHRB licenses all personnel. Facility Supervispersonnel must pass a test as part of their licensingrequirements. Planning must include staff adequate tooperate two shifts daily, day and night, six days a week. categories include the following:

Facility SupervisorAssistant SupervisorAdmissions sellerParking attendantsProgram sellerSecurity Captain

Security GuardsJanitorialUnskilled Labor

ACCOUNTING AND RECORD KEEPINGOperating expenses, with the exception of parimutueloperations, are the responsibility of the Fair. The Fair mukeep careful records of its operating cost per performancethat is, separately, for day racing, for night racing, and by

breed. Daytime racing (thoroughbred) is nearly alwaysprofitable. Occasionally the less popular night events wioperate at a loss. When this is the case, the racingassociation must, by law, make up the difference. Statute

specifies that a facility need not operate at a loss; hence thimportance of accurate records. A Fair must accept allsignals offered to it, even if it incurs operating losses, as loas the racing association pledges to make up any differenThis pledge is generally secured by a bond.

Tested and Licensed byF&E and the CHRB


PROSPECTUS


11/17

san matecounty

Fair

PARIMUTUEL DISTRIBUTIONS

PARIMUTUEL DISTRIBUTIONSRevenue generation is the principal reason for the conduct ofparimutuel wagering on horseracing. This revenue flows to a widespectrum of statutory beneficiaries. The Legislature determines thedivision of those revenues; that division is sometimes a matter ofpolitical debate.

Commissions from parimutuel handle are apportioned to thevarious beneficiaries according to a schedule that includes region(Northern California or Southern California racing), breed of horses(thoroughbred, quarter horse, etc.), and whether the handle isgenerated on-track or off-track.

The following schedule shows division of the satellite parimutuelhandle for Northern California thoroughbreds. Distributions forother breeds and regions are similar.

Conventional handle means Win, Place, and Show wagers; Exoticmeans Exacta, Daily Double, Triple, Pick Six, etc.

Returned to Winning Bettors (conventional) 84%; (exotic) 79%Other Parimutuel Distributions (conventional) 16%; (exotic) 21%

Racetrack CommissionsPurses (Horsemen)State License FeeSimulcast Operator (Expenses)Satellite FacilityPromotion (to Satellite Facility)Breeders' AwardsStabling & VanningLocal GovernmentEquine Research (UC Davis)

RETURNED TO WINNING BETTORSAll money wagered on losing horses is divided up for payment tothe winning bettors and other beneficiaries. Winning bettors receivethe largest portion of parimutuel distributions.

RACING ASSOCIATIONSAll racing associations operate to make a profit. Part of their incomeis derived from commissions on parimutuel handle. The associationcommission is equivalent to the Purses', or Horsemen's, commission.

PURSES PAID TO HORSEMENThe commission for payment of purses is racing's mechanism ofself-sustenance. A percentage of the handle, equivalent to thecommission paid the racing association, flows back to the owners of

winning horses. Purses are normally paid, in diminishing amounts,based on the order of the horses finishing the race. Associationsmay supplement the purses from time to time, but the primarysource of purse money derives from a portion of the handle.

STATE OF CALIFORNIAThe State assesses a license fee for the right to conduct racing.Recipients of this money include the General Fund, the F&E Fundsand the CHRB. The budget for the CHRB is funded from licensefees. These distributions are set in statute.

DISTRIBUTION FOR SIMULCAST EXPENSES(Paid to Simulcast Organization)This distribution is used for payment of satellite wagering expensuch as satellite transmission, totalisator, and off-track parimutulabor. Any portion of this fund left unspent after expenses are pdivided equally between the horsemen and the association.

COMMISSION TO SATELLITE FACILITY - 2% LOCATION FEEEach satellite wagering facility receives 2% of the handle generatfrom its operation. In the parimutuel reports, this is known as alocation fee. This constitutes approximately half of the grossoperating revenue. Admissions, parking, and concessions constithe other half.

DISTRIBUTION FOR PROMOTION(Paid to California Marketing Committee)A proportion of handle flows to a fund used for promotion of horacing and satellite wagering. This money is administered by thCalifornia Marketing Committee (CMC). Fair satellite facilitiesreceive an allocation for marketing and promotion from this fundCARF coordinates marketing plans and budgets with individualFairs and with the CMC.

BREEDERS' AWARDSThis portion goes to breeders of winning horses as an incentive tsuccessful operations and for financial support of California'sThoroughbred breeding industry.

STABLING AND VANNING FUNDThis fund helps pay the expenses of keeping and transporting hoIt helps insure the long-term vitality of the racing economy by ofsetting the high cost of stabling and moving fine competitiveracehorses.

LOCAL GOVERNMENTLocal government may receive 0.33% of handle generated at eachsatellite location. This goes to the municipality or county in whithe facility is located or to a combination of both. The localgovernment must formally request payment; if it does not, the mreverts to the State.

UC DAVIS EQUINE VETERINARY RESEARCHThe Veterinary School at University of California, Davis has a worenowned Equine Research Facility. This fund helps sustain thaeducation and research facility.

CONCLUSION

Horseracing and Fairs both play an important role in California'sagricultural economy. Horse racing represents a sector of theagricultural economy that creates many jobs and generatessubstantial revenue. The horseracing industry relies on its benefpolitical alliance with the Fairs to support legislation in its intereThe Fairs rely on the revenue generated from horseracing tosupplement their operating revenue. Their relationship is mutua

beneficial.


PROSPECTUS


12/17

san matecounty

Fair

STATEMENT OF QUALIFICATIONS

QUALIFICATIONS OF THE FAIR'SDEVELOPMENT TEAM

California Authority of Racing Fairs(CARF), working with the CaliforniaDepartment of Food and Agriculture,

been active in the design anddevelopment of all twenty-three Satelli

Wagering Facilities in presently operati

at California Fairs. The development of mof these Fair facilities has also included the activpartnership of the California ConstructionAuthority, which was constituted in the early 1to manage construction of satellite facilities. Outeam has extensive working relationships with contractors, designers and specialized vendorsnecessary for the successful implementation of unique activity. This experienced team of Fairorganizations, with a proven record of success idevelopment of twenty-three California Fairsatellite wagering facilities, is ready to assist SanMateo County Event Center in the design,

construction, licensing and operation of a satellwagering facility on its Fairgrounds. One measof the success of this group: in 2006, the satellitwagering facilities implemented by this team

transacted parimutuel wagering of over $650million.


PROSPECTUS


13/17

ADDENDUM

REVISED OFFER FROM

CALIFORNIA AUTHO RITY OF RACING FAIRS

AND

CALIFORNIA DEPARTMENT OF

FOOD & AGRICULTURE

TO

SAN MATEO EVENT CENTER

FOR

DEVELOPMENT OF

ASATELLITE WAGERING FACILITY

ON ITS FAIRGROUNDS

N OVEMBER 5, 2007


14/17


15/17


16/17


17/17

ADDENDUMSANMATEOFAIR

SATELLITEWAGERINGFACILITYDEVELOPMENT

BUDGETSUPPLEMENTSFEBRUARY2008

SanMateoCountyLoan $900,000 DivisionofFairsandExpositionsLoan $200,000

TotalSupplemental $1,100,000

ExistingProjectBudgetNovember2007 $3,500,000

PROJECTBUDGETASOFFEBRUARY2008 $4,600,000

Documents

Prospectus - Satellite Wagering Facility San Mateo Fair - Christopher Korby - CARF wAddendum-Mar -08